Knowledge communication, exploitation and endogenous innovation: the moderating effects of internal controls in SMEs

Abstract

This research develops a theoretical framework for leveraging internal knowledge effectively to achieve endogenous innovation goals in small and medium‐sized enterprises (SMEs). The manuscript reports the findings based on a sample of 213 SMEs, suggesting that knowledge exploitation has a mediating effect on knowledge communication for enhancing endogenous innovation. The research reveals that strategic controls moderate the relationship between knowledge exploitation and innovation positively, whereas financial controls appear to moderate the same relationship negatively. Our findings advocate that entrepreneurs in SMEs should focus on communication and the exploitation of knowledge as well as carefully consider their choice of efficient control mechanisms.